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Gold slips as US dollar gains against euro on EU Greek debt revision

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Gold declined today after it was revealed that Greece’s budget deficit in 2009 was even worse than thought. Eurostat revised Greece’s budget deficit to 13.6% of the GDP (Gross Domestic Product) from the previous estimate of 12.9%. Reports suggested that the actual deficit could be greater than 14% due to doubts over the quality of statistics presented by the debt-stricken country.

The news further hit the euro, which has been under pressure from Europe’s debt problems for months as Greece’s fiscal crisis unravelled and sovereign debt problems surfaced in other euro zone states including Portugal and Spain.

Gold is seen as an alternative asset to the US dollar and usually moves inversely to the Amrican currency.

While silver followed gold and declined, platinum rose on reports of stronger after consultancy GFMS said that the demand for PGMs (platinum group of metals) is likely to increase due to rising car sales, particularly in China, and last year’s declines in mining output.

Gold and silver declined, dropping to US$1,140/oz and US$17.88/oz, while platinum went against the tide, rising to US$1,733/oz.

Most major miners were in decline today. Gold producer Randgold Resources (LSE: RRS) posted a marginal gain, while platinum miner Lonmin (LSE: LMI) lost 2.1% and silver producer Fresnillo (LSE: FRES) dropped 2.8%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) was flat.

Aquarius Platinum (LSE: AQP) went against the tide, tacking on a small gain, while fellow midcaps gold miner Petropavlovsk (LSE: POG) and silver producer Hochschild Mining (LSE: HOC) followed the trend, sliding 1.1% and 3.5% respectively.

Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and South American based explorer Mariana Resources (AIM: MARL) led the small caps, rallying 14.3% and 13.7% respectively. Copper and gold miner EMED Mining (AIM: EMED), which has secured authorisation to connect its Rio Tinto mine in Spain to the national power grid, rose 7% and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) tacked on more than 5%.

Commodity asset development company Mercator Gold (AIM: MCR), diamond miner Stellar Diamonds (AIM: STEL) and Iran focused gold explorer Persian Gold (AIM: PNG) were in decline, slipping 9.5%, 8.8% and 6% respectively.

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